Who wants to be a millionaire?

By George Chamberlin, 09.04.2018Financial Education

Who wants to be a millionaire?

Most people would absolutely want to be one. You might be lucky enough to be on a TV show where people have a chance to win a million dollars. Unfortunately, very few do. It’s more likely you will save or invest your way to a million.

The best friend of a want-to-be millionaire is time. I came across an item in Men’s Health magazine saying if you save $1,000 a month and earn an average of 4 percent, it will take 38 years to amass a million dollars. So, if you start at age 20, when perhaps $1,000 a month might be a bit hard to scrape together, you will hit your mark when you reach 58 years old. If you start the effort to become a millionaire when you are 40 and probably near your peak earning years, you will get there at age 78.

By the way, saving to achieve your financial goal of a million will be a bit more difficult in today’s interest rate environment. Earning 4 percent is challenging but not impossible.

The other option would be to invest a portion of your nest egg for growth. Of course, there is no guarantee, but over the past 50 years the average return on the S&P 500 has been close to 8 percent, cutting the time it takes in half. Of course, it's not a straight line up as the current stock market proves. There will be years your investments will grow faster and years when they will slow down. But given time, you will likely be rewarded.

It may be wise to work with a professional investment advisor. However, remember fees and taxes will limit your growth, so be sure to understand how those two things impact your return.

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